This November, San Diego voters will be considering cannabis tax on the ballot.
San Diego County voters will be asked to authorize a tax system for marijuana businesses in the unincorporated areas on the November ballot, after the Board of Supervisors this week approved a marijuana tax ordinance.
In a 4-1 vote, the supervisors agreed Tuesday to add a marijuana tax ordinance to the county books and place a measure for marijuana taxation on the ballot.
The measure is in part of the board’s efforts to expand options for cannabis businesses in unincorporated county.
The board considered how to set tax rates on marijuana businesses that would cover the cost of developing and administering a cannabis program, including permits, enforcement and other operations, and also provide general tax revenue to the county.
According to Mark Lovelace, a cannabis consultant and former Humboldt County supervisor, taxes at various stages of the industry including cultivation, distribution and retail add up to an overall tax rate on the consumer product.
“We recommend that local tax rates be set to try to keep the cumulative rate at or below 30 percent,” he said.
“The development of the program itself should be value neutral to the county. That leaves any revenue generated by the cannabis tax available for whatever spending priorities the board may choose: public safety, health and social services, roads and infrastructure, social equity issues or any other government services.”
Lovelace said that 99 of 113 local cannabis tax measures introduced in California have passed, but cautioned that their success depends on the type of taxes they authorize.
Board Chair Nathan Fletcher said the county should pursue a general tax, adding that the board could decide later how to use that money within the county budget.
“I think using a general tax is the right approach,” Fletcher said. “As a board at a subsequent date we can make decisions about how to appropriate general tax dollars.”
“It would be disastrous for county government to start imposing additional taxes on other jurisdictions that already have their own cannabis systems in place, and there would be no compelling argument for double taxing them from a local government standpoint,” he said.
Lincoln Fish, CEO of Outco, one of the existing cannabis businesses in unincorporated San Diego County, said, “We’re not opposed to taxes, but we want to see them applied appropriately and used appropriately. There’s a myth that cannabis is just a huge profit center. The truth is most cannabis businesses in California are actually losing money right now, and a big part of that is taxation. It makes it difficult to run a business, but it also forces consumers to go to the black market.”
